With the banking and credit industries shot to hell, selling a home is difficult right now. Without good credit, financing a home can be equally challenging. There are ways to buy a home without a bank. For this house I went with Owner Financing.
The original deal was 5k down, 500/month for a year at 7%, with a balloon at the end for the entire balance. The land is just right for me, has an antiquated (1972) mobile home with an addition to the entire length, and a garage with a superior frame and cheap but well painted sheating. It is fenced and cross fenced, has gates in place, a livestock
shelter, 4" deep well in a pumphouse, faucets in 4 locations, a few fruit
trees and a strip of woods. I can see one neighbor.
I liked the land. The trailer has been worked on and is mostly in good repair. I'm handy with most things around a house although I wont touch electrical. I met the owner and talked about everything under the sun. Her husband has passed away a couple years before and the place was too much for her. She had some life insurance, but invested it without a good idea of how to invest and subsequently lost most of that. She wanted to buy a place in town with a small lot, near work. I determined that the refinancing the place will be difficult, but the owner did not have the savvy to repo the place, or the money to pay for an attorney, so I took a chance and wrote the check.
My house in town was also owner financed. As I had no credit score a bank was not an option. I went through bankruptcy back in 93 and have taken no loans or credit
cards since. It was not that I had bad credit...I had a blank beacon score. Because both of these properties are owner financed, I still qualify as a first time home buyer
should I ever decide to go to a bank for a
mortgage loan.
When the year was near on this place, I talked to the owner with my concerns. Because the trailer was built in 1972, no bank would carry paper on it. For most banks the cutoff for mobile home notes is 30 years. After that, there is no way to secure commercial financing on a mobile home. I made an offer to refinance with the same terms, 7%, 500/mo, and sweetened the deal by offering another full year of payments up front. I've made all payments on time or early, and we got along well, even helped her figure out why the furnace did not work in her new place (gas tank was turned off, pilot needed to be lit). Being a small town it came to my attention through the grapeving that she had put what was left of the life insurance money on her new place and a new car. She was broke and there was no way for her to hire an attorney to foreclose. So I held the
cards. I made the offer, with a check, and the deal was made. Because I'm a great guy, I pay her early every 2 months rather than monthly. While the note says I have 7 years to pay off the balance, I should have it paid off in less than 3.
Mind you, there are plenty of folks out there who know the routine, and can serve you papers in a heartbeat if you miss a payment or fail to meet a balloon. Some more unscrupulous characters use owner financing as a means of drawing an income from a property and snatch it back in order to repeat the process with another victim. If you get to the closing and the seller pulls out an Agreement to Deed or some other surprise, take this as a red flag and walk away from the deal.
